PFCB - FIRST LOOK AT 2010

PFCB’s Co-CEO Bert Vivian presented at an investor conference this afternoon and provided some commentary on 3Q trends and a first glimpse at 2010.  Mr. Vivian maintained his less than encouraging near-term outlook for the industry but appeared optimistic about the long-term prospects at PFCB.  In 2Q09, same-store sales growth declined 6.8% at the Bistro and was relatively flat at Pei Wei.  At that time, management had said that the Bistro had underperformed relative to internal targets while Pei Wei outperformed.  Looking at 3Q09, Mr. Vivian stated that sales trends at both the Bistro and Pei Wei are similar to what we saw in 2Q with the Bistro continuing to struggle. 

 

The company is currently planning for muted development in 2010 with about 4-5 Bistros in the pipeline and about 2 Pei Wei units.  Management is exploring additional sites for Pei Wei development, primarily in existing markets, but these sites are most likely slated for 2011 openings.  So, overall, new unit development will come down again in 2010.

 

Mr. Vivian stated that he has to believe that the environment will get better in 2010.  That being said, with reduced unit growth, he is not expecting much in the way of revenue growth.  He even said, “If comps somehow magically went plus 10%, you’d probably find me dancing naked in the streets.”  Instead, he thinks that -5% to +5% revenue growth is a more reasonable range.  Assuming flat revenues in 2010, Mr. Vivian expects that based on the company’s current outlook that cost of sales will be somewhat favorable relative to 2009 (outside of produce which is not contracted), PCFB will be able to hold labor and cost of sales (60% of restaurant expenses) flat as a percent of sales. 

 

If these revenue and cost expectations prove to be right, the company should continue to generate more free cash flow in 2010 (guided to $70-$80 million in free cash flow in 2009).  With this cash, PFCB will continue to pay down debt (and expects to be debt free by mid 2010) and buy back shares.  Additionally, Mr. Vivian said that management could discuss paying a dividend.


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more